Ajax Computer Company Is an Accrual-Method Calendar-Year Taxpayer

question 36

Multiple Choice

Ajax Computer Company is an accrual-method calendar-year taxpayer. Ajax has never advertised in the national media prior to this year. In November of this year, however, Ajax paid $1 million for television advertising time during a "super" sporting event scheduled to take place in early February of next year. In addition, in November of this year the company paid $500,000 fora one-time advertising blitz during a professional golf tournament in April of next year. What amount of these payments, if any, can Ajax deduct this year?

• A)$1 million
• B)$500,000
• C)$1.5 million
• D)$1.5 million only if the professional golf tournament is played before April 15
• E)No deduction can be claimed this year

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Definitions:

Apple Products

Consumer electronics and software created by Apple Inc., known for their innovation and design.

Bentley Motors

A British manufacturer of luxury cars and SUVs known for their luxury, craftsmanship, and performance.

Ultra-luxury Segment

A niche market targeting extremely wealthy consumers by offering products or services that are of the highest quality and price.

Market Coverage

The degree to which customers in a specific market are aware of and purchase a product or service.